The £620m London Borough of Waltham Forest Pension Fund and the £2.7bn Surrey County Council Pension Fund have each invested £20m in a holiday park fund.
The two local authority pension funds have both committed to the £205m Darwin Leisure Property fund, which is the only fund in the UK investing in the £6bn holiday park industry and owns and operates a portfolio of 15 holiday parks in the UK.
London Borough of Waltham Forest pension and treasury Manager Debbie Drew said: “We have been looking to diversify our investment portfolio into alternative assets and the Darwin Leisure Property fund suited our needs perfectly. The fund is able to offer us strong, predictable long-‐term returns which are uncorrelated against other asset classes and offer security from being backed by real assets.”
Surrey County Council pension fund and treasury manager Phil Triggs said: “We were very impressed with the nature of the fund, which offers returns that are driven by the business operations at the holiday parks. These business operations generate steady cash flows, as well as opportunities for capital growth, and we have great confidence that Darwin will continue to deliver the strong returns they have been generating using this unique business model.”
This comes after the London Borough of Waltham Forest Pension Fund chairman Nick Buckmaster (pictured) told portfolio institutional in May that the fund was going to allocate to leisure parks to increase its exposure to uncorrelated assets.
Speaking at the time, he said: “We are looking at a leisure park opportunity because I like the idea that caravans is not a monopolistic market. This opportunity offers pretty stable returns of between 7% and 10% by investing in usually run-down facilities and improving the infrastructure. So older caravans might give a rental income of £100-200 a week, but if you upgrade to a lodge – like those at Center Parcs – suddenly that rental income comes to £1000-1200, plus onsite facilities.
“With the weakness of the pound and austerity more people are holidaying in the UK and are keen to see their own country. It will go to our investment consultant Mercer and if all goes well we would like to allocate in the summer.”
The Darwin Leisure Property fund has generated performance returns of 26.2% over the last 12 months and 16.7% annualised over three years, as at 31 October.
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